Spain's acting Prime Minister Mariano Rajoy (L) and leader of center right party Ciudadanos Albert Rivera sit before a meeting at the Spanish parliament in Madrid on February 11, 2016. | Curto de La Torre/AFP/Getty

Rajoy uses budget deal as bargaining chip

Spain's acting Prime Minister Mariano Rajoy reached out to center-left and center-right rivals on a possible coalition deal, saying he will push the EU for greater flexibility on Spain's budget deficit targets if they back him for another term.

The Popular Party (PP) leader sent the heads of the Socialist party (PSOE) and Ciudadanos a series of possible scenarios for forming a government, which include a request to Brussels for more flexibility in meeting deficit targets. The request is seen as a gesture of détente by Rajoy as talks between the political parties continue in the wake of December 20 elections that gave no party a majority.

Rajoy's proposal outlines possible compromises between the three parties. Rajoy, the PSOE's Pedro Sànchez and Ciudadanos' Albert Rivera have all backed the need for budget deficit flexibility to support Spain’s economic recovery.

"Spain has to comply with the path of budgetary stability agreed by the European Union, but one can also make use of the flexibility provided by European legislation," said Rajoy at a press conference at the parliament in Madrid after meeting Rivera on Monday.

The 2015 deficit figure is not yet known, but will likely be above 4 percent. Brussels has warned Spain that will have to keep making adjustments to bring the budget gap to 2.8 percent this year.

"The PP would agree to defend a state position in the EU that Europe knows we will comply [with budgetary rules], but we need flexibility," said Rivera, adding that Rajoy had shown "openness" in coalition talks. The PSOE has already announced that is in favor of the budget renegotiation.

Rivera is acting as a mediator between PP and PSOE — in particular between Rajoy and Sànchez, who will meet on Friday. The leaders of the two big parties have been increasingly at odds as they seek to form coalitions.

PSOE spokesman Antonio Hernando said Rajoy was "irresponsible and disrespectful with the institutions" for behaving like a candidate for prime minister.